This research will examine the extent to which hospital outcomes, as measured by hospital mortality and readmission rates, are related to the market and regulatory environment faced by the hospital. It will also explore the role of organizational strategy in determining the effects of market and regulatory factors on hospital outcomes. A database for 550 system and 900 competitor hospitals in market areas covering 45 states across the country has been assembled. For these hospitals data on costs, resources, competition, DRG indexes, hospital strategies and hospital outcomes have been collected for 1983-84 and, for some variables, updated to 1986. Mortality and readmission data will be collected for 1987-88 and where necessary other data will be updated. A model of the effects of DRGs, market price competition and hospital strategies on patient outcomes will be specified and tested using these data. The analysis will provide valuable information on the role of market and strategy factors in the behavior of hospitals and the effect of that behavior on hospital outcomes. It will also provide information on trends in adjusted hospital mortality data in the period since the introduction of Medicare prospective payment.